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Rule targets tax scofflaws.

A proposed rule would require contractors to certify that they have paid their taxes.

The proposed amendment to the Federal Acquisition Regulation specifies that a company could be suspended or debarred for delinquent taxes, unresolved tax liens or a conviction or civil judgment for violating tax laws or failing to pay taxes.

The rule would require contractors to report any such violations in the previous three years.

Under current regulations contractors are required to report only indictments, convictions or civil court findings of tax evasion within the past three years.

"The additional certifications are needed to identify prospective offerors that may have outstanding tax obligations that may be delinquent so that the Government can make an informed responsibility determination, as necessary," the FAR councils said in an explanation of the proposed rule.

The move to crack down on tax scofflaws follows two Government Accountability Office reports documenting widespread tax delinquency among federal contractors. Last year GAO found about 10% of GSA contractors owed back taxes totaling $1.4 billion. The year before the auditors reported that 27,000 Defense Department contractors owed about $3 billion in overdue taxes.

"Thousands of GSA contractors abused the federal tax system with little consequence," GAO charged in its 2006 report. (SAA, 3/24/06)

Minnesota Republican Sen. Norm Coleman, then chairman of the Senate's permanent investigations subcommittee, called for tighter rules last year.

The proposed rule is FAR case 2006-011. Comments are due May 29.
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Publication:Set-Aside Alert
Date:Apr 6, 2007
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